5 Common Risks Every Business Can Face
Everything in life involves risk to one degree or another and it’s the same for doing business. Starting a business in itself means you’re taking a risk. While it’s necessary to move forward despite the fact that risks exist, it’s also important to be mindful of what risks you could face, so you can put measures in place to avoid problems as much as possible.
This is achieved through effective risk management strategies and one way you can manage risk is by installing specialised enterprise risk management software. The more you manage risk and pay attention to risk management, the smoother things will be overall for your business.
Let’s now look at some common risks just about every business can face.
Table of Contents
#1 – A Tarnished Reputation Of Your Business and Brand
Today, the reputation of a business, company and brand is more important than ever. While maintaining a positive reputation has always been something to continuously strive towards, in these days of the internet and information spreading far and wide at a rapid pace, anything that can potentially tarnish the business reputation will soon be splashed all over the internet.
Businesses need to be mindful of providing excellent customer service and quality at all times. Just as negative press can spread rapidly, so can feedback that promotes your business and brand in a positive light, so it works both ways.
#2 – Compliance Risks
All business owners and members of their employ need to follow compliance laws; a set of rules and regulations that govern how business should be conducted. Compliance laws are multi-level and include things like health and safety, fairness in the workplace, laws against discrimination and sexual harassment, paying fair wages and more.
Failure to be in compliance can result in fines or even the closure of a business, so it’s vital that all business owners and company employees are aware of the rules and adhere to them.
Don’t risk non-compliance. Learn what’s required of your business and your workforce and have measures in place to ensure compliance at all times.
#3 – Financial Risks and Issues
Avoiding financial risks and pitfalls is a priority for every business (or at least it should be). Financial risks can include things like being unable to meet the minimum payments for business loans or being able to pay creditors, or investing money in some aspect of the business that doesn’t end up paying dividends.
If you allow customers or those you supply goods or services to, to buy now and pay later, there is a risk attached. Will they make their payments on time (or at all)?
When it comes to business and financial risks, it can be all-encompassing, as so many aspects of business revolve around the movement of money in one direction or another. Each decision regarding a money matter should be carefully weighed up first before committing to anything.
#4 – Decision Making Risks
All businesses, large or small, involve making business decisions regularly. Get a decision right and it’s good for the business. Get something wrong and it could prove to be a major setback. Decisions in themselves are a risk in many instances. Decisions could be about strategy, what direction the business should go, expenditure, hiring staff and so on.
Major decisions should be thought through before moving forward and preferably be run by others in the company to seek their opinion, feedback and wise counsel.
#5 – Operational Risks
This point is in regard to how the business is run and its operating procedures. Things like employee mistakes, damage to equipment or goods, or even fraud and theft can result in a dent to business profits and potentially harm the reputation of the brand in the process.
Human risk also tends to fall in this category, as many commercial enterprises rely on employees to get everything done each day. If workers are not doing their job efficiently, this will affect the profitability of the business. Employees who are unreliable or fail to follow workplace safety procedures are also putting the company at risk.
These are some of the common or general risks that all businesses can face. Having a solid risk management strategy is the best way to combat risks and avoid problems.